Activision Blizzard's second quarter beats estimates on strength of digital

The video game maker sails past expectations as it gears up to deliver the sci-fi shooter Destiny, its most expensive title to date.

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Activision Blizzard, the company behind the popular World of Warcraft and Call of Duty games, reported second quarter sales and profit that topped Wall Street's estimates on Tuesday. The reason: an uptick in digital sales for its many online multiplayer franchises.

Sales, after some adjustments, rose to $658 million, up from $608 a year ago, with a record 73 percent of that revenue coming from digital purchases. Profit, excluding some costs, was 6 cents a share. Analysts expected profit of 2 cents a share on sales of $608 million, according to surveys by Thompson Reuters.

Activision shares were up 79 cents, or 3.53 percent, to $23.15 in after-hours trading after closing down 25 cents to $22.36 on Tuesday.

CEO Bobby Kotick is spending heavily on future titles like Destiny, the $500 million sci-fi shooter the publisher will release for Sony's PlayStation and Microsoft's Xbox platform on September 9. Activision hopes Destiny will turn into a billion dollar franchise, and has a 10-year deal with developer Bungie, the makers of the original Halo trilogy of shooters, to publish Destiny titles exclusively. Playstation users were able to try out the game early as part of a beta program that Activision just ended, with critics responding favorably to the title.

Destiny "will be the largest new intellectual property launch in video game history," Kotick said in a press release. "As the world's largest and most profitable independent interactive entertainment company, we remain focused on creating the most compelling, engaging games for our dedicated audiences."

The company could sell more than 10 million copies of Destiny, according to Wedbush Securities analyst Michael Pachter. Pre-order data from Amazon suggests the game's full-year performance could reach as high as 20 million units, he said.

Activision also keeps winning gamers with its long-running World of Warcraft franchise. The next big title in that franchise, Warlords of Draenor, will be released later this year, and the company says it's already received more than 1.5 million pre-orders. And while subscriber numbers fell this quarter to approximately 6.8 million paying users from 7.6 million, the game -- which costs around $15 a month -- continues to lead the field of subscription-based online role-playing games.

Hearthstone -- the free-to-play online card game for iPad, Mac, and PC - is also helping to boost digital sales. Activision said it expects to bring Hearthstone to Apple's iOS and Google's Android mobile platforms later this year.

While net income dropped 50 percent to $45 million this quarter from the same period a year ago, Activision raised its full-year outlook for sales to $4.7 billion, up from $4.625 billion. The company expects third-quarter revenue to soar close to $1 billion on the strength of Destiny. Activision also forecast third-quarter adjusted sales of $975 million and profit of 11 cents a share. Analysts are anticipating sales of $898 million and profit of 13 cents a share.

 

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